When 25-year-old Brad Wardell began developing software for an OS/2 computer game in 1993, nobody had ever sold any games for this operating system. At the time, software developers just didn't see any real market for them. But Wardell had an idea: a new space-based strategy game called Galactic Civilizations. He'd been hanging out in Internet newsgroups discussing his concept with fellow OS/2 users, and many couldn't wait to try their hands at it. So War-dell, convinced that OS/2 was becoming a mainstream operating system, began developing the game in hopes the market would expand.

Turns out, he was right: Today, 8 percent of the world's PCs run on IBM's OS/2 platform. What's more, Wardell's Canton, Michigan-based company, Stardock Systems Inc., expects sales of $3.5 million this year and has a strong foothold in the OS/2 software market.

Was Wardell's venture a lucky guess? Perhaps. Yet, in many ways, it's not really surprising so many small technology-based companies like Wardell's are finding seemingly sudden success. On the contrary, myriad marketplace indicators point to the fact that all systems are go for today's start-up technology companies. An alignment of the entrepreneurial planets, if you will, is making the climate riper than ever for starting or growing a high-tech business.

"There has never been a better time to start a technology-based business," says Mark Rice, assistant dean of Rensselaer Polytechnic Institute's (RPI) Lally School of Management and Technology and director of RPI's entrepreneurship center in Troy, New York. "All the necessary ingredients are becoming more abundant, and the opportunities to pursue [such a business] are becoming more plentiful."

Opportunitys Knocking

In this era of global economies, rapidly emerging industries and
dramatic social change, the world is evolving at breakneck speed.
As a result of this fast pace, gaping holes and discontinuities
that are not being met by current products and services are
emerging in the marketplace, says Rice. These gaps provide
entrepreneurs with unparalleled opportunities to improve existing
products or create entirely new ones.

Meanwhile, Rice says, changes in technology are occurring
equally fast, with innovations making headlines seemingly every
day. When you combine these two facts, "there's a greater
set of opportunities to match up emerging market needs with new
technologies," says Rice.

Consider the case of Craig Skevington and Mary Bayly. In his
previous business, Skevington, 43, had developed an information
management program for manufacturers to track production processes
in real-time. With momentous changes shaping the health-care arena,
though, Skevington and Bayly, who worked for Skevington as a
marketing director, saw a healthy opportunity to tailor the
application to this growing industry--and to build an entirely new
company, which they did in January 1996.

"With so many changes going on in managed care, a lot of
organizations are combining, and the information systems needed to
link them together [didn't] exist," says Bayly, 39,
co-owner of Flow Management Technologies Inc. in Clifton Park, New
York. "We had the core technology; we just needed to adapt it
for the health-care field."

Admittedly, not every entrepreneur has access to cutting-edge
technology like this. Yet a shift in attitudes among today's
scientists and top innovators is quickly changing all that, says
Rice. With lucrative contracts drying up in recent years,
government, corporate and university laboratories have changed
their focus from primarily long-term research to the
"transfer" of technology for commercial needs.
Consequently, a host of laboratories at the forefront of high-tech
research--including the Massachusetts Institute of Technology
Lincoln Laboratory in Lexington, Massachusetts; Sandia National
Laboratories in Albuquerque, New Mexico; and the Wisconsin Alumni
Research Foundation in Madison--have active technology transfer
programs, pairing entrepreneurs with the necessary technologies to
build their businesses.

Government agencies such as the Small Business Administration
(SBA) are also tackling this issue. The Small Business Tech-nology
Transfer (STTR) program, initially a three-year pilot program
started in 1993, was developed by the SBA to help nonprofit
research organizations, universities and small businesses
cooperatively bring technologies and products to market. The SBA
estimates more than $50 million was awarded to entrepreneurs in the
STTR program by the end of 1996. (Congress has extended the STTR
program through September.)

These types of programs are effectively placing technology in
the hands of those most capable of turning it into viable ventures:
entrepreneurs. Moreover, not only is it now easier to identify
which technologies can make the shift into the commercial sector,
but more systems are being created to facilitate their transfer,
says Chuck Rancourt, director of RPI's Office of Technology
Commercialization. University programs like RPI's Rensselaer
Technological Entrepreneurship Council, which brings students and
faculty with technical and entrepreneurial backgrounds together to
network, locate investors and learn about technology
commercialization, are becoming more common.

"Programs like these are reinforcing the idea that
engineers and scientists have ideas, but they require entrepreneurs
to help build commercial ventures," says Rancort.

Perhaps the greatest factor contributing to the swelling
opportunities for high-tech entrepreneurs is the burgeoning
information technology (IT) market. Driven in large part by the
swiftly expanding service sector, a whole new segment of the
economy is opening to new hardware and software products. According
to market research firm International Data Corp. (IDC) in
Framingham, Massachusetts, the worldwide software market is
expected to grow from $94 billion in 1995 to $177.4 billion by the
year 2000. Furthermore, IDC projects worldwide IT spending
(including hardware, software and IT services) will grow by 10
percent this year and an average of 9 percent annually throughout
the decade.

"The information technology industry is just mind-boggling
to the extent to which it [offers entrepreneurial]
opportunity," says Rice. "There is a huge amount of
attention put on the value of information and knowledge
today."

It's the Internet, though, that's garnering most of the
attention in IT circles these days. "The Internet has so much
to do with the explosion in IT," says Rice. "We're
sitting on the doorstep of a whole new information revolution
because of what's going on with the Internet."

Ron Schmelzer, 21, and Dan Housman, 23, are among the
entrepreneurs riding the Internet wave. In December 1994, the
partners founded VirtuMall, an electronic commerce site for hosting
Web sites. But when market needs shifted (as they often do in the
Internet business) and companies began moving away from centralized
sites to develop their own, VirtuMall had to reinvent itself by
morphing into an Internet software company. Profiting from a
nationwide shortage of Web programmers and customers' desire to
cut costs, in April 1995, Schmelzer and Housman founded VirtuFlex,
a Cambridge, Massachusetts, business that helps users build dynamic
Web applications.

While the Internet provides ample opportunities for
entrepreneurs like Schmelzer and Housman, owning an Internet-based
business isn't always a smooth ride. "There are no
standards, proven market leader or proven market direction. Nobody
really knows where the Internet is going," says Schmelzer,
VirtuFlex's president. "Since there's no force pushing
it in a particular direction, you may spend time working on a
project and by the time you're done, the market has totally
shifted in another direction."

High-tech businesses also experience some additional pressures
that nontechnology companies don't. "In addition to all
the [typical concerns] of owning a business, a technology-based
business also has the risk and uncertainty of developing new
technology," says Rice. "On the other hand, [this] can
give companies a competitive advantage if they can deal with the
risk successfully, and it becomes a barrier to businesses trying to
compete with them."

Money Matters

According to VentureOne Corp., an investment research firm in
San Francisco, venture capital companies raised a record $10
billion last year. The good news for technology-based businesses is
high-tech companies were among the primary recipients of this
venture capital. IT companies pulled in the lion's share of
those funds, with a whopping 59 percent. Businesses in the life
sciences fields, which also include technology-based companies,
brought in 22 percent of the funding, while nontechnology companies
took in the remaining 19 percent.

Throughout the last five years, software start-ups, particularly
those involved in networking, communications and the Internet, have
continued to attract the largest share of venture capital funding,
says Jesse Reyes, director of Venture Economics Information
Services, the venture capital research and consulting division of
Securities Data Co. in Newark, New Jersey. This trend is expected
to continue well through the end of this year.

Interactive Learning International Corp. (ILINC), a
distance-learning software company in Troy, New York, is one
company benefiting from the torrent of venture capital funds making
its way to high-tech businesses. (Distance-learning software allows
companies and schools to offer training sessions and courses to
off-site employees and students.) Last year, ILINC received $1.75
million in venture capital funding from Geocapital Partners, a Ft.
Lee, New Jersey-based venture capital firm specializing in IT
investment.

"Geocapital approached us and was very eager to make an
investment in the distance-learning market," says Jim
O'Keefe, ILINC's CEO. "They were aggressively pursuing
IT placement."

Still, experts say the sobering fact for high-tech entrepreneurs
who aren't in the hot industries, such as the Internet and
distance learning, is this: Venture capital funding is probably out
of their reach. Even though funds are more plentiful than ever, the
majority of venture capital firms are looking to invest large sums
of money in well-established companies with proven track records,
leaving the majority of high-tech start-ups and most small
companies, in effect, out of the loop.

To address this gap, a host of government, state and regional
programs have emerged to foster economic development, furnish
costly research and development (R&D) funding, and provide
access to risk capital, says Rice. Among them is the Small Business
Innovation Research (SBIR) program, which provides grants or
contracts for small high-tech companies in the start-up and
development stages. Each year, 10 federal departments and agencies,
including the National Science Foundation, the Department of Energy
and the Environmental Protection Agency, are required by the SBIR
to reserve a portion of their R&D funds to award to small
businesses. Approximately $900 million was given to small
technology companies in the last two years.

Another bright spot for high-tech financing: More private
investors, often referred to as "angels," have stepped up
to the plate to back technology-based businesses in recent years.
"Angel investors are really carrying the weight for
early-stage investing [in technology-based companies]," says
Gerald Benjamin of International Capital Resources, an investment
banking and capital sourcing firm in San Francisco, and author of
Finding Your Wings: How to Locate Private Investors to Fund Your
Venture (John Wiley & Sons).

Rather than dealing with venture capitalists--who have a
reputation for being too controlling and too interested in
short-term returns--many high-tech entrepreneurs are cutting out
venture capital firms in favor of capital from angels. To their
advantage, angel investors typically furnish small businesses with
start-up capital, a long-term vision--and a whole lot more.

"The beauty of working with angel investors is that they
provide more than just money," says Benjamin. "They
provide extensive expertise, contacts and knowledge of investing
from an investor's perspective to help raise further money.
They are also able to be more closely involved, unlike venture
capital firms."

Having an angel watching over you isn't always a blessing,
though. "Whenever you let investors in," warns Benjamin,
"you [face] the issue of control, and for many entrepreneurs,
this is a critical problem."

Meeting Of The Minds

One of the fundamental elements of a successful technology-based
venture is having the ability to build what Rice calls an
"entrepreneurial team." This means a staff that not only
works well together but also possesses the key strengths that keep
a business competitive, including tip-top technical, marketing and
sales skills. Within the last five years or so, says Rice, a number
of factors have evolved to help high-tech entrepreneurs pull
together the expertise they need to create these teams. At the root
of these changes is the entrepreneur himself.

"It has never been easier to get training and education to
develop the skills, attitudes and knowledge necessary to become an
entrepreneur," says Rice. "We've seen an explosion of
entrepreneurship programs, and there are more ways to learn about
entrepreneurship than ever before."

More than just the blossoming of first-rate entrepreneurial
programs, though, there's also been a move among educational
institutions to meld entrepreneurship and technology programs, says
Rice. Educators are realizing that to build competitive
technology-based businesses, students must have an understanding of
both the technical and business sides of the venture. As a result,
some schools now offer undergraduate and graduate programs with an
emphasis in technology entrepreneurship. The programs link the
knowledge and experience from technical disciplines, such as
computer science, with business management to create a well-rounded
entrepreneur.

As more educators join this trend, leading technology schools
around the country are increasingly infusing entrepreneurship into
their core curricula. Among them: RPI; Carnegie-Mellon University
in Pittsburgh; Baylor University in Waco, Texas; University of
California, Los Angeles; University of Iowa in Iowa City;
University of Colorado at Boulder; and University of Texas at
Austin.

"The MBA program gave me a strong foundation for
understanding technology and how to base decisions about
technology," says Mark Bernstein, ILINC's co-founder and
executive vice president, who graduated from RPI's MBA program
in 1994. "It was also very helpful in understanding the basics
of raising capital, the trade-offs involved in designing technology
and how to stay focused."

Technology incubator programs at many universities are also
giving high-tech entrepreneurs a leg up. Established in 1986, the
University of Alabama at Birmingham's (UAB) Office for the
Advancement of Developing Industries houses approximately 18
technology-based companies, providing them with below-market rates
on laboratory and office space, access to UAB scientific expertise,
and clerical and professional staff support. Others, like the
Boulder Technology Incubator's Entrepreneurial Success program,
offer high-tech entrepreneurs mentors, business advisors and
introductions to capital resources.

Networking is another facet of entrepreneurial education whose
importance for high-tech entrepreneurs can't be overstated. In
today's collegiate environment, students from separate
disciplines are encouraged to interact more than ever before, says
Rice. Those with technical skills are becoming more aware of career
opportunities in nontechnology ventures, while business students
are pairing up with technical talent to build businesses.

"There's a lot of networking with students, faculty and
well-connected alumni," says Flow Management Technology's
Bayly, a 1979 graduate of RPI's MBA program. "To bring
that level of people into your sphere of advice and influence is
just an incredible advantage to your business."

Meanwhile, world-class universities continue to pump out
students with cutting-edge technical skills. This has resulted in a
highly talented labor pool, says Rice, enabling entrepreneurs to
hire qualified staff in almost any part of the country.

And to further round out the entrepreneurial team, high-tech
consulting and incubation companies have evolved to supply
technology start-ups with expertise. For instance, Interactive
Minds, founded in January 1995, provides online, multimedia and
interactive media companies with interim management to develop
strategic planning, raise financing or fill tactical roles like
directors of marketing, sales or product development.

"High-tech companies are looking for resources to augment
their businesses," says Randy Haykin, president of Interactive
Minds in Pleasanton, California. "With a team of people with
high-tech experience who've done this before, companies
won't have to waste their time."

Even so, forming an entrepreneurial team in a high-tech company
isn't without its challenges. For instance, with such a sharp
demand for technical talent, the problem of key personnel migrating
to other high-tech start-ups can be a tough problem for
entrepreneurs.

Despite a long list of hurdles, high-tech entrepreneurs can
still look to the future with well-founded optimism. Thanks to a
recent convergence of opportunities--namely changing market needs
and the evolution of technologies to address them, ready access to
capital and a larger pool of talented technical personnel to hire
or partner with--the odds have swung in favor of high-tech
businesses in recent years. Overall, the message from all ends of
the entrepreneurial spectrum seems to be loud and clear: Seize the
day.